LLP vs. Company: Which is Better for Your Business?
Published on:
Category: EDUCATION
Author: CS NAWAL KISHOR VERMA
 and a Private Limited Company (PLC) (1).png)
LLP vs Private Limited Company
The ultimate comparison to help you choose the right business structure
Starting a business? Choosing between a Limited Liability Partnership (LLP) and a Private Limited Company (PLC) can be crucial for your success. Here's everything you need to know.
What is LLP?
A Limited Liability Partnership combines partnership flexibility with company-like limited liability protection.
- ✔️ Governed by LLP Act, 2008
- ✔️ Minimum 2 partners required
- ✔️ Limited liability protection
What is a Private Limited Company?
A Private Limited Company is a separate legal entity with shareholders and directors.
- ✔️ Governed by Companies Act, 2013
- ✔️ 2+ shareholders & directors
- ✔️ Easier fundraising
Key Differences
| Area | LLP | Company |
|---|---|---|
| Legal Structure | Partnership-based | Corporate Structure |
| Liability | Limited to contribution | Limited to shares |
| Compliance | Low | High |
| Taxation | 30% flat rate | Tax benefits available |
Who Needs LLP?
- 🏢 Small businesses wanting less compliance
- 💼 Professional services (lawyers, CAs)
- 📉 Businesses with limited growth plans
Who Needs a Private Limited Company?
- 💰 Startups seeking investors
- 🚀 Businesses planning to scale
- 🏛️ Those wanting tax benefits
LLP Advantages
- ✓ Lower compliance requirements
- ✓ No audit if turnover < ₹40L
- ✓ Easy to form and operate
LLP Disadvantages
- ✗ Hard to raise funding
- ✗ Higher tax rates
Company Advantages
- ✓ Strong credibility
- ✓ Easy fundraising
- ✓ Tax benefits
Company Disadvantages
- ✗ High compliance costs
- ✗ Mandatory audits
Conclusion: Which One Should You Choose?
Choose LLP if you want simplicity and fewer compliance requirements.
Choose a Private Limited Company if you need fundraising opportunities, scalability, and tax benefits.